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Robert Reich

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The Swamp of Washington and the Morass of the Economy

Posted: 06/12/11 10:38 PM ET

Washington was built on a swamp. In the summer, temperatures can reach over 100 degrees -- as they did over the last few days when I made the rounds of Washington Democrats, repeatedly asking why no bold jobs plan is emerging.

Here's a sample of their responses:

"Dead in the water. We'll be lucky if we get votes to raise the debt ceiling without major spending cuts this year and next."

"Are you kidding? It's all budget deficit, budget deficit, budget deficit. Nobody's thinking about anything else."

"Republicans beat us up so bad over the first stimulus there's no way we're gonna try for a second."

"We got them [Republicans] cornered on Medicare. Now they want to change the subject to jobs. Forget it."

"No need. We'll see job growth in the second half of the year."

"The President doesn't want to put anything on the table he can't get through Congress."

And so it went. Not a shred of urgency.

This morning I was on ABC's This Week, debating jobs and the economy with Republican Senator Richard Shelby of Alabama. Shelby restated the standard Republican playbook of spending cuts and tax cuts (except for one instant when he inadvertently conceded America emerged from the Great Depression only when government spent big time mobilizing the nation for World War II).

But what struck me most was the similarity between Shelby's overall attitude and that of the Democrats I talked with -- a kind of shrug of the shoulders, a sense that it's really not all that bad out there, and that nothing can be done anyway. (In the green room, before going on, Shelby told me employment in northern Alabama was actually fairly good and the problem was near the coast.)

The recovery is stalling across the nation yet in the Washington swamp it's business as usual.

Americans are scared, with reason. We're in a vicious cycle in which lower wages and net job losses and high debt are causing consumers to cut their spending -- which is causing businesses to cut back on hiring and reduce pay. There's no way out of this morass without bold leadership from Washington to rekindle consumer demand.

If the Democrats remain silent, the vacuum will be filled by the Republican snake oil of federal spending cuts and cut taxes on big corporations and the wealthy. Democrats -- starting with the President -- must have the courage and conviction to tell the nation the recovery is stalling, and what must be done.


Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.

 
 
 

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HUFFPOST SUPER USER
olerealist
retired trial attorney; former member of VA abd Wa
10:50 AM on 06/23/2011
WHY HAS FEDERAL SPENDING BEEN INCREASING?
I occasionally read "The Examiner" tabloid newspaper just to see what kind of crazy right wing punditry is out there.
In their June 23rd issue I found an interesting graph. Basically this drew horizontal lines representing fiscal activity over several decades. The “revenue” line was fairly flat over the period while the "spending" line was rapidly rising essentially beginning in year 2000.
Why does spending keep increasing? First, we will stipulate that a relatively small part were for like bridges to nowhere and economically stupid subsidies.
But take note the following expanded spending exponentially:
* Bush instigated wars, Iraq and Afghanistan
* Bush enactment of the pharmaceutical benefits added to Medicare
* Bush deregulation of banking and financiers leading to bubble and crash causing Bush and successors to spend billions in bank rescue loans and economic stimulus & unemployment relief.
* Oil spill disaster enhanced by Bush appointed regulators falling asleep.
* temporary expense to counter the explosive growth of health care costs and insurance premiums.
* rapid anticipated increase in the aging of U.S. population
* dealing with the influx of millions of refugees (legal and illegal) seeking free hospital care and diverse federally provided benefits to the poor.
HUFFPOST SUPER USER
lambdin1
What's this?
06:44 PM on 06/15/2011
Exactly right! Democrats are afraid of their own shadow!
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06:46 AM on 06/14/2011
I have a friend in australia that told me australia has ridden out the recession much better than the usa and their unemployment is much better than ours. Why? Their president, a conservative at the time, enacted a large stimulus program. Ours shoulda been 3X as big, at least.
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03:31 AM on 06/14/2011
Mr Reich, you are right. We have no representaion in DC by our Dem Reps. Bernie Sanders, Russ Feingold, and the Weiner were the best we had, and all but Bernie Sanders is gone now---booted out by their own members in the Dem party.
I think we have passed the point of no return in this country, and untill someone with guts and integrity steps up, maybe you?, we may as well pack it up and hunker down.
Most posters on here just want to do bitch, much les get out and actually show their disenchantment by taking the time to march on DC in an organized well palnned march of millions. That shows me not many are willing to do what it takes to get anything changed.
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06:41 AM on 06/14/2011
You forgot the congressman w/guts, allen grayson, but he's gone too. We'll be in permanent recession w/high unemployment for years, hovering on the precipace of depression as the middle class shrinks and shrinks and our standard of living goes down. Unless........................the republicans win big and capture the presidency and congress. Then, we'll be in depression quickly. The bright news under that scenario is that mush brain americans will finally wake up and usher in progressivism for a generation and maybe toss republicans unto the ash heap of history. That is what happened, sort of, after 1929, ppl woke up, got unions going, regulated, stimulated the economy, taxed the rich, started soc sec, medicare, etc.
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theprogressiveanalyst
Ignorance is a dangerous thing
12:50 AM on 06/14/2011
Lest we forget, there were 3 different studies that predicted significant job losses if Republican budget cuts were enacted. As part of the budget deal in December, federal spending was reduced approximately $40 billion and payroll taxes were cut. According to the Republicans, that should spur job growth. Instead, we see the recovery slowing way down, as those three studies predicted, given the job cuts. If the Democrats cave on budget cuts in order to get a rise in the debt ceiling, buckle your seat belts as we will probably see the economy take another nose dive.
09:30 PM on 06/13/2011
Unfortunately the Democrats have no guts whatsoever. They are a pack of cowards. They just stand around hoping that the Repugs are seen for the nasty job-destroying liars that they are. I don't think the fact that the Repugs are evil will be enough to elect cowardly Dems next year.
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cdcfbw
09:48 PM on 06/13/2011
Me either, this country is doomed to fall into another depression and it will be much worse than this "great recession" we are now feeling now.
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06:43 AM on 06/14/2011
Agreed. Feels like a depression every time I turn on our so called "news"
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07:52 PM on 06/13/2011
Better keep your dinky off the net Robert, if your going to aggrevate the left and their unwillingness to defend the average American against the republican totalitarian hoard. Obama needs those corporate donations. Too bad what you say is the truth, and if Weiner goes, there goes the only democrat who defended the interests of the average American. I should have paid attention when I voted in 2008. I live in Illinois, and I knew the Illinois democrats were pretty much benign, and not street fighters, and that's what you need against these republican thugs that were voted in in 2010.
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George Hanshaw
There are none so blind as those who will not see.
07:43 PM on 06/13/2011
"If the Democrats remain silent, the vacuum will be filled by the Republican......."

Better to remain silent than to give a nervous chuckle and admit the 'shovel ready' jobs weren't as shovel ready as you had thought.

Talk about an unforced error......
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Gary Strawley
07:35 PM on 06/13/2011
Why don't the dem's try to pass a jobs bill just so the gop will show who they really are buy blocking
it??? Like they did with the other job bills they blocked and that people don't know about??? They
said they promised to pass job bills, They lied as usual, It is more imporant to them that the Gov.
fails so they can get rid of Obama!!! They don't care about jobs or people unless they are rich!!!!
The gop wants a government for big business BUY BIG business!!!! !!!
Why aren't the dem's and news showing that some gop states are trying to out law brith control bills
where are the womans groups????
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08:49 PM on 06/13/2011
ah yes, a 'jobs bill' - lets pretend that we can increase valued employment through decree! And while we are at it, let decree that the minimum salary or wage by $20k/year! Then there will be no poverty! Yeah! Don't know why everyone has a problem with this economics thing, we can just legislate away scarcity!
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theprogressiveanalyst
Ignorance is a dangerous thing
12:35 AM on 06/14/2011
The problem is that any such effort in the House would be killed in committee and any such effort in the Senate wouldn't get past a Senate filibuster so in neither house of Congress could the Democrats even force a vote on a jobs bill.
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cvwilson
07:19 PM on 06/13/2011
The United States has a $2.2 trillion infrastructure deficit.
http://www.infrastructurereportcard.org/
Programs to correct this would create real jobs building real things and using debt to acquire real assets should be understandable by anyone who has bought a home or started a business. Our grandparents built their way out of the Great Depression. They built things that we are still using today.
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08:37 PM on 06/13/2011
LOL! yes, of course, due to increasing their debt, our grandparents built their way out of the Depression.... funny, funny!

what helps is not just 'building' things willy-nilly, but actually doing things (which could include building things...) which are considered valuable BY THE MARKET and are thus relative to all OTHER possible things to be doing with our very scarce resources...

what is a 'real thing' as opposed to some other type?
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theprogressiveanalyst
Ignorance is a dangerous thing
12:40 AM on 06/14/2011
Try actually reading something about the Depression, the PWA, the WPA, CCC, TVA, and other programs that had long lasting positive effects on the economy. You are obviously just repeating ideological talking points without having read any real history. You might start with The Coming of the New Deal by Arthur Schlesinger.
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Slater Torret
06:42 PM on 06/13/2011
Thank you Mr. Reich. Right as rain, as usual. However, can I throw a monkey wrench into your equation? For every 1% of GDP growth, there is a concomittant 1% growth in energy use -- therefore pollution and dependence on energy. Is there anyway we can increase jobs, stop our increase in energy and global warming at the same time? (I'm not saying I don't have an answer, I'd just like to hear if he, or anyone else, has one that's sustainable.)
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super
07:26 PM on 06/13/2011
grow green jobs
07:36 PM on 06/13/2011
I'm not Mr. Reich, but I have an answer even if it is currently impossible.

Federal funding to identify and enact the one most life cycle energy effficient improvement to every structure in the U.S.A. using products at least 75% or so produced in our country. This is the very same suggestion I made before the original and ineffictive stimulous.
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08:52 PM on 06/13/2011
what? 'life cycle energy efficient improvement'? what?
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danglines
06:16 PM on 06/13/2011
The Swamp of Washington and the Morass of the Economy
06:12 PM on 06/13/2011
What no politicians and few pundits dare to face is the possibility that our current economic model is the real problem. Spurred on by media, advertisers and politicians alike to consume more and more while paying less and less, we have lost our ability to produce.

Farmers have come to be viewed with disdain, manufacturing work viewed as beneath us, sole propietorships as overpriced and inefficient. Lying and cheating are embraced by two generations now as the only way to succeed.

The solution is not more phantom money in a misguided attempt to stimulate the financial sector. The solution is not more inefficient, wasteful, slow-moving, graft filled, over-regulated, federal stimulous.

The solution is not to inflate the economy to make the public debt appear less onerous.

The solution is very hard to swallow and is likely to hurt most those who have the most. But since they own the government, we will harm those with the least the most in ill-guided attempts to restore an unsustainable model.
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06:38 PM on 06/13/2011
sheesh, I read all that, all the foreplay leading up to the grand climax and... you didn't close the deal! where is your solution?! You say alot about what are not the solutions but you forgot to give your advice! sheesh..... I am disappointed
07:28 PM on 06/13/2011
Sorry, space is limited in a single message.

Some Solutions:

1) Either establish uniform financial regulations throughout the world that eliminate tax havens (including Switzerland) or withdrawl from our disastrous free trade agreements and establish punitive tariffs.

2) End our utterly impossible war in Afghanistan as well as all military aid in the Middle East.

3) Eliminate the ability of lawyers, drug makers and health providers to advertise their services.

4) Eliminate the Department of Education and NCLB. Greatly restrain OSHA and the EPA.

5) Establish a single-payer health care system with the power not only to negotiate prices but to determine reasonable treatments on the public.

Yes, I see the inherent conflict in my proposals, but the alternative is to eliminate ALL government-sponsored health care.

6) Establish a tiny trading fee or human-based time constraint to eliminate high-speed trading among markets.

7) Greatly simplify the Federal Income Tax code making it flatter with few--if any--deductions and only credits to those in true need.

8) Let disability be determined completely by medical assessment and not "advocates".

9) Require a period of extremely lightly paid federal service for all youths.

10) Repeal the Patriot's Act in its entirety.

11) Enact the ERA

I am out of room...
05:57 PM on 06/13/2011
Spending cuts are needed - like yesterday!!! The governments ever expanding arms need to be pulled back and get out of the American people's way. Entitlements need to be strongly slashed, they are bleeding the country dry, the abuses in the system(s) sic medicare, s. security, and welfare are incredible! I am tired of my taxes going up and up and for what? The waste in Washington is staggering, the amount Washington throws away needs to brought under control. Term limits and an aware citizen need to be in play - to save the coountry from going over the brink of no return!!!
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HUFFPOST SUPER USER
super
07:34 PM on 06/13/2011
taxes going up and up? We have the lowest tax rates in a century!
Indeed, entitlemen­ts need to be slashed: the sense of entitlemen­t of the have-alls and the super-rich who ran the economy into the ground with their gambling, the entitlements of the defense contractors who get away with charging an arm and a leg for everything, the handouts to the oil companies, the almost-free public land being donated to the coal companies and cattle grazers, the sense of entitlemen­t that BP feels in exercising its right to destroy our oceans and our coasts...
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fairandbalanced100
12:01 AM on 06/14/2011
Taxes are the lowest they have been in over 60 years. That is why the deficit is so big ,
plus lots of money was wasted on Bush's dumb wars & his recession made unemployment high.
80% agree we need to keep social security & medicare & are against cutting them .
Ryan's plan to kill medicare is unpopular & scared most senior citizens & middle aged.
07:39 AM on 06/14/2011
Oh really - my property taxes rise every year, sales taxes have gone up, d.m.v. fees on everything - registering my car, new license plates an added tax for the M.T.A. have risen twofold - should I go on? Ryan at least has a plan and knows the dire circumstance we are facing - B.O. slashes billions in Obamacare for medicare - the only one who is scaring the seniors is Debbie Downer Wasserman Shultz!!! Please be informed and stop be a koolaide drinker! The public unions are draining the resources for their selfish lifestyle!!
05:49 PM on 06/13/2011
The tax and spend policies of Obama have created this depression. Should Obamacare kick in, it will further wreak havoc with the economy. Hopefully it will be declared unconstitutional in the courts. If not it will be repealed after the next elections.
06:16 PM on 06/13/2011
And I suppose that war without general sacrifice (or funds to pay), increased benefits to retirees without additional revenue and the "deficits don't matter" attitude of Bush II have nothing to do with the problems.
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larmarch5
06:18 PM on 06/13/2011
The GOP congress passed and GWB signed resolutions to raise the debt ceiling seven times 2000-2007. The GOP passed and GWB signed Medicare D without funding it or offsets. The GOP sat back while GWB put two wars "off the books" with borrowed money. The GOP passed and GWB signed tax cuts without offset. GWB issued new mortgage guidelines and cut regulatory functioning which promoted a housing bubble and massive financial shenanigans and then turned TARP money over to Hank Paulson to hand out to his GS and AIG BFF's.